May 24, 2016

TCPA Under Scrutiny in Court and by Senate

by the Consumer Financial Services Group

The Telephone Consumer Protection Act (TCPA) and a 2015 omnibus Declaratory Ruling and Order (2015 Order) interpreting the TCPA issued by the Federal Communications Commission (FCC) have recently faced additional challenges in two different forums—a lawsuit in the Eastern District of North Carolina and a full committee hearing before the Senate Commerce Committee.

The TCPA prohibits calls using an automatic telephone dialing system or prerecorded voice to any telephone number assigned to "a paging service, cellular telephone service, specialized mobile radio service, or other radio common carrier service, or any service for which the called party is charged for the call," unless the call is made with consent, for emergency purposes, or pursuant to an exemption created by Congress or the FCC. In its 2015 Order, the FCC created an exemption for certain financial communications to alert a customer to fraud and identity theft, data security breaches, steps taken to prevent or remedy the harm of identity theft or a data breach, or money transfers.

The Commerce Committee held a hearing on May 18, 2016, to discuss whether the TCPA is still an effective tool to protect consumers from unwanted calls after 25 years. One theme reiterated throughout the hearing: the 2015 Order does not allow companies to send consumers information that they want or need unless such communications fall under one of the TCPA’s narrow exemptions. In particular, despite encouragement by Consumer Financial Protection Bureau Director Richard Cordray that financial institutions should send customers text messages with real-time account updates, financial institutions run the risk of violating the TCPA if they do not obtain the appropriate, prior, express consent.

The TCPA and its exemptions are also being challenged on constitutional grounds in a federal district court. Five political organizations recently filed a suit seeking a declaratory judgment that the TCPA’s restrictions on automated or prerecorded calls to mobile telephones violate the First Amendment. American Association of Political Consultants, Inc. v. Lynch, filed in the Eastern District of North Carolina on May 12, is notable because the defendant is Attorney General Loretta Lynch and its named plaintiffs range across the political spectrum:

American Association of Political Consultants, Inc., a bipartisan, nonprofit association of political professionals;

Democratic Party of Oregon, a nonprofit organization;

Public Policy Polling, LLC, a for-profit company that uses automated telephone surveys to measure and track public opinion;

Tea Party Forward PAC, a nonprofit organization that works to promote the interests of the Tea Party; and

Washington State Democratic Central Committee, the Democratic Party organization in the State of Washington, which works to elect and support Democrats.

Though politically diverse, all of these organizations call individuals on their mobile telephones. Four of the organizations make such calls to solicit donations and to discuss political and governmental issues.

The complaint notes that the FCC and Congress have created TCPA exemptions, including the financial exemptions discussed above, for package delivery notifications and calls to collect a debt owed to or guaranteed by the United States. The complaint alleges that these exemptions are based on the content of the calls and that by favoring commercial speech over the plaintiffs' political speech, the mobile telephone ban violates the First Amendment rights of these political organizations.

In addition to a declaratory judgment that the TCPA violates the First Amendment, the suit seeks preliminary and permanent injunctions enjoining enforcement of the TCPA by the government, nominal damages of $1, and attorneys' fees and costs.

Ballard Spahr's TCPA Task Force assists clients in navigating the complex and challenging issues that arise under the TCPA. The Task Force, which comprises regulatory attorneys and litigators, provides counsel on TCPA compliance and avoiding TCPA liability, including reviewing policies and practices and helping to design mobile text message and prerecorded and autodialed call campaigns. It also assists clients in commenting on regulatory proposals and handling scrutiny from regulators, including preparing for examinations, responding to investigations, and defending against enforcement actions. Task Force members also defend clients against TCPA class or individual actions.

Ballard Spahr's Consumer Financial Services Group is nationally recognized for its guidance in structuring and documenting new consumer financial services products, its experience with the full range of federal and state consumer credit laws, and its skill in litigation defense and avoidance (including pioneering work in pre-dispute arbitration programs).

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